London, March 25 (Bloomberg) -- The British pound may gain for a second day against the dollar on concern the war in Iraq will last longer and be more difficult than previously expected. Iraq has authorized troops to use chemical weapons once U.S. soldiers cross a ``red line'' drawn on a map around Baghdad, CBS said on its Web site, citing unidentified U.S. officials. A tougher-than-expected war will weaken the dollar because it drags on U.S. business and consumer confidence, analysts said. ``Pre-war optimism has vanished and it has been replaced by a more sober assessment of the task ahead and a more sober assessment of the dollar,'' said Steven Barrow, a currency strategist at Bear Stearns International Ltd. The pound was trading at $1.5773 at 8:05 a.m. in London compared with $1.5760 late yesterday. Last Wednesday, it dropped to $1.5539, the lowest since Dec. 2. The U.K. currency was at 67.79 pence per euro from 67.54.
Concern the U.S. will shoulder most of the costs of a war and the rebuilding of Iraq may also depress the U.S. currency because of concerns the government will have to increase sales of Treasuries, damping their allure, analysts said. U.S. consumer confidence probably fell for a fourth month in March, economists polled by Bloomberg News expect a report at 3 p.m. London time to show. The conflict tends to weigh on the pound against the euro because the U.K.'s close military alliance with the U.S. makes it less of a so-called haven investment.//www.quote.bloomberg.com